GBP/USD: forecast for August 3-9
By Elizaveta Belugina
British pound is trying hard to fight US dollar’s strength.
Members of the Bank of England's Monetary Policy Committee
GBP/USD was sticking to the 1.5550 area. The bears were not very active despite good news from the US. The reason is that like the Federal Reserve, the Bank of England is also close to raising interest rates. In line with expectations, British economic growth has accelerated in Q2. Although growth is fueled by the service sector and not manufacturing, recent hawkish comments of the central bank’s official make investors rather positive about the pound.
Next week the UK will release three PMIs – manufacturing, construction and services. On Thursday, the Bank of England will publish its quarterly inflation report. As you may remember, British inflation was heavily hit in the previous months, but, according to the regulator, it was due to the falling oil prices, and without their disturbing impact inflation is OK. Moreover, for the first time ever the Bank of England’s meeting minutes will be released right after the meeting. The market will expect at least two members of the Bank of England’s Monetary Policy Committee to vote for the rate hike, which is bullish for GBP. Surely, such abundance of data on Thursday will need comments from the top officials, so Governor Mark Carney will give a press conference.
We expect great volatility in GBP/USD. The risk for pound will be to the upside. Strong resistance lies at 1.5700 – many times the bulls failed to overcome this psychological mark. If GBP/USD manages to fix above this point, it could rise to 1.5900/30 (June high). Support is seen at 1.5500 and 1.5400.